CHAPTER 13 Connect 1. Web Source International, an American company, is planning to enter South Korea.





1.      Web Source International, an American company, is planning to enter South Korea. While the company has operations abroad, it has no experience with Asian markets. To limit its exposure to this foreign market, Web Source International needs a type of entry that allows the company to collect information and learn about the South Korean market. Which of the following types of entry is most suitable?

2.      High transportation costs, the threat of tariff barriers, and potential problems with local marketing agents are disadvantages of:

3.      In which mode of market entry does a contractor agree to handle every detail of the operation for a foreign client, and hand over the operation once it is fully functional?

4.      One disadvantage of licensing as a mode of entry into foreign markets is that:

5.      Hexagon Corporation, an American high-tech company, wants to set up operations in a foreign country to profit from its core competency in technological know-how. Therefore, the company needs to select an entry mode that offersprotection of technology. Which of the following entry modes is most suitable for Hexagon Corporation?

6.      Tasty Pasta is an American fast food restaurant chain with locations in 20 countries. When the company enters a new foreign market, it usually selects a combination of franchising and master subsidiaries. These master subsidiaries are joint ventures with local partners because of the advantages joint ventures bring to Tasty Pasta. Specifically, joint ventures are politically more acceptable and they:

7.      Setting up wholly owned subsidiaries is preferable to joint-venture arrangements because wholly owned subsidiaries:

8.      Which of the following is a common reason for the failure of an acquisition?

9.      The _____ postulates that top managers typically overestimate their ability to create value from an acquisition, primarily because rising to the top of a corporation has given them an exaggerated sense of their own capabilities.

10.  American-based Xylor Company has decided to establish a wholly owned subsidiary in Chile. To decide whether to acquire an enterprise in the market or to establish a Greenfield venture, the company evaluated the pros and cons of each strategy. In the end, Xylor Company opted to establish a Greenfield venture. Which of the following likely was a major point in favor of Greenfield ventures?




1.      The document that states that the bank will pay a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents is called the:

2.      Which of the following documents issued to the exporter by the common carrier transporting the merchandise serves as a receipt, a contract, and a document of title?

3.      The agency of the U.S. government whose mission is to assist in the financing of U.S. exports of products and services to support U.S. employment and market competitiveness is called the:

4.      An alternative means of structuring an international sale when conventional means of payment are difficult, costly, or nonexistent is a:

5.      ChipRight Company sold 10,000 computers to the government of Pabul. Instead of receiving cash, the company received crude oil as payment. This is an example of:

6.      BigTire Company, a U.S.-based car manufacturer, sold cars to the country of Bealand. Bealand paid BigTire Company in dollars, but in exchange, BigTire Company agreed to spend some of its proceeds from the sale on electronic equipment produced by Bealand. Which type of countertrade arrangement does this example illustrate?

7.      An agreement to purchase goods and services with a specified percentage of proceeds from an original sale in that country from any firm in the country is called:

8.      The use of a specialized third-party trading house in a countertrade arrangement refers to:

9.      SteelPro Corporation negotiated a deal with the Republic of Monaslu under which SteelPro would build three steel plants in the country, and as partial payment, the company would receive steel over a 10-year period. This is an example of:

10.  Which of the following is a drawback of countertrade?

Mary Warner, the sales manager for a medium-sized apparel company, is facing a tremendous challenge in convincing her boss to get the company to export. As she

1.      reflected on this challenge, she realized that many medium-sized firms like hers are not proactive in seeking export opportunities because:

2.      Unhappy with the speed with which the company’s export initiative was going, the CEO called Mary Adams, the person in charge of exports at Ambient Products, to understand the reasons for the company’s delay. Which of the following is a valid defense that Mary Adams can use?

3.      John Ciro, the CEO of Ciro Products, a small manufacturer, told his employees that he is part of a group that was going abroad along with representatives of the U.S. Department of Commerce and other U.S. businesspeople to meet with qualified agents, distributors, and customers. Ciro was most likely talking about the:

4.      The Forlan Group is an export management company (EMC). It has found that potential clients are often confused as to what an EMC does. Which of the following is a function of an export management company such as The Forlan Group?

5.      Florida Jet skis, based in Miami, want to export, but being a small third generation family business is cautious, particularly with respect to financial risk. The CEO, Armand Millard, is contemplating the firm’s approach to exporting. Which of the following is a strategic step that you would advise Florida Jet skis to take to increase its probability of exporting successfully?

6.      Delios Trading is exporting for the first time to Japan and has contracted with Abe Imports in Tokyo for an initial order valued at $110,000.00. Delios Trading wants Abe Imports to secure a document from a Tokyo bank that would indicate that the bank would pay Delios Trading $110,000.00 upon presentation of specified documents by the exporter. What is the name of the document that Delios Trading is asking for?

7.      Financing aid that will facilitate exports, imports, and the exchange of commodities between the United States and other countries is provided by the:

8.      To cater to the growing demand for luxury cars, Terabithia Republic agreed to buy 5,000 cars from MotoSporto Inc. in exchange for 5,000 barrels of oil. Due to a lack of trust, Terabithia decided to make it a one-time-only deal. Which of the following forms of countertrade is the country most likely to use?

9.      From an exporter’s perspective, why is an offset more attractive than a straight counter purchase agreement?

10.   TruWorth Petroleum negotiated a deal with a foreign country in which TruWorth would build several ammonia plants in the foreign country and receives ammonia as a partial payment over a 20-year period. This is an example of:



1.      Which term refers to identifying distinct groups of consumers whose needs, wants, and purchasing behavior differs from others in important ways?

2.      Japan, with a high population density and a large number of urban centers that grew up before the automobile, has a retail system with many small stores serving local neighborhoods and to which people frequently walk. However, none of these stores has a major share of the market. According to this information, which kind of a system does Japan have?

3.      Silver Spoon Company sells its products in the country of Kusoko through an import agent, which then sells to a wholesaler. In turn, the wholesaler sells to several retailers that ultimately sell to the consumer. In this example, the amount of intermediaries between the producer and the consumer suggests that the channel is:

4.      Which term refers to the expertise, competencies, and skills of established retailers in a nation and their ability to sell and support the products of international businesses?

5.      The country of Cadmia is known around the world for the high-quality wine it produces. Consumers who do not know much about wine tend to rate the wines from Cadmia more favorably than the wines from Chile, even when independent analysis shows that Cadmian wines are actually inferior. Which of the following barriers to international communication provides an explanation to this situation?

6.      Which of the following barriers to international communication refers to the number of other messages competing for a potential consumer’s attention?

7.      Which of the following factors favors a push strategy?

8.      In terms of the communication strategy of a company, which of the following factors favors a pull strategy?

9.      _____ Occurs when an individual or business capitalizes on a price differential for a firm’s product between two countries by purchasing the product in the country where prices are lower and reselling it in the country where prices are higher.

10.  _____ Refers to the fact that a firm’s pricing strategy in one market may have an impact on its rivals’ pricing strategy in another market.


1.      John, a U.S. citizen, is a product manager who moved to Argentina to work at the South American office of Ridmore Corporation, an American company. Based on this information, John is a(n):

2.      In the Canadian company Hourglass Inc., Canadian nationals hold all the important positions in the foreign subsidiaries. According to this information, what is the staffing policy pursued by Hourglass Inc.?

3.      Which of the following is an advantage of adopting a polycentric staffing policy?

4.      Which of the following is a disadvantage of adopting a geocentric staffing approach?

5.      Which of the following strategies is compatible with a polycentric staffing policy?

6.      A citizen of India who works for a multinational company moves to the United States to work at the headquarters for the multinational company. This person would be classified as a(n):

7.      According to the results of a seminal study by R.L. Tung, what was the most important reason for expatriate failures for U.S. multinationals?

8.      Among the four dimensions that seem to predict success in a foreign posting, the attributes of _____ enhance the expatriate’s ability to interact effectively with host-country nationals.

9.      Ryan, an American manager working in a foreign subsidiary, tends to treat foreign nationals as if they were home- country nationals. As a result, he has been experiencing significant management problems and considerable frustration with his overseas assignment. According to Mendenhall and Oddou, which of the following dimensions that predict success in foreign postings is lacking in this situation?

10.  Which approach to expatriate pay equalizes purchasing power across countries so employees can enjoy the same living standard in their foreign posting that they enjoyed at home?

“Serving the world’s poor profitably”


1.      The bottom of the pyramid (Bop) market consists of approximately _____ billion people.

2.      Bop population is generally defined as people whose income is about US$ _____ per day or less.

3.      One of the misconceptions regarding the Bop market is:

4.      Bop strategy intends to:

5.      Which one of the following is not a strategy for serving the Bop markets?

6.      One real challenge to serve the Bop market is that:

7.      Ericsson’s mini-GSM cellphone service provides stand-alone networks for up to 5 thousand users within a 35km (21.88 mile) radius. Capital costs to the operator, usually a local entrepreneur, can be as low as $4 when cell phones are shared in communities. This is an example of:

1.      Relationship between core competences and entry mode